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Nelson Mullins is continuing to monitor developments related to COVID-19, including guidance from the Centers for Disease Control (“CDC”); World Health Organization; various health officials; and federal, state, and local government authorities. The firm is taking appropriate precautionary actions and has implemented plans to ensure the continuation of all firm services to clients from both in office and remote work arrangements across in our 25 offices.

Nelson Mullins COVID-19 Resources

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March 20, 2020

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February 12, 2020

Family Limited Liability Limited Partnerships

By Carl S. Rosen

The family limited liability limited partnership can have significant asset protection advantages.  In general, a FLLLP (the “FLLLP”) is a partnership consisting of at least one (1) general partner and one (1) limited partner. A general partner has the sole responsibility and authority to control the partnership (i.e., the general partner makes investment decisions and determines when to distribute assets). A limited partner has only a passive investment in the partnership and generally does not participate in partnership decisions.

The initial partners of a FLLLP are typically parents and their descendants (or trusts for descendants).

The interest of a limited partner in a FLLLP is not “exempt” from creditors under Florida law.

Florida law, however, dictates the procedure through which a creditor of a limited partner can levy upon the partner’s interest in a FLLLP. A creditor of a partner has no right to seize assets within the FLLLP to satisfy the debt of a partner.  This reflects the policy that it is more important to protect other partners’ interests in a partnership than it is to permit the creditor of just one partner to satisfy a judgment in a manner that might disrupt the partnership’s business.

A creditor’s exclusive remedy under Florida law is limited to the right to receive distributions from the partnership that the debtor partner is entitled to receive. If the general partner does not order any distributions, then the creditor has no right to any partnership property.

A creditor of a limited partner seeking to obtain such an exclusive remedy must apply to a civil court to obtain a “charging order” gainst partnership distributions. If the general partner awards no distributions to limited partners, then the creditor gets nothing. Moreover, in a properly drafted partnership agreement, a creditor should be given no rights to inspect the books and records of the partnership so that he is unaware of partnership income or partnership business. Additionally, a creditor who obtains a “charging order” is responsible to pay the income tax and the debtor partner’s share of partnership income even if no assets are distributed.